Australia casts a shadow over East Timor's future

Canberra helped liberate its tiny neighbour but now claims ownership of vast oil riches beneath its sea. Kathy Marks reports

Twelve-year-old Julmira Babo collapsed unconscious while playing outside in her village in East Timor's Ermera district. Her family carried her to a hut and gave her traditional medicines but, a few days later, she died. An autopsy was performed by a United Nations pathologist, who was astonished by what he discovered.

Twelve-year-old Julmira Babo collapsed unconscious while playing outside in her village in East Timor's Ermera district. Her family carried her to a hut and gave her traditional medicines but, a few days later, she died. An autopsy was performed by a United Nations pathologist, who was astonished by what he discovered.

Inside Julmira's body were hundreds of large worms that had travelled from her stomach up her oesophagus and into her mouth, blocking her trachea. She died of asphyxiation. "In my entire career as a pathologist in the Third World, I have never seen anything like it," Dr Nurul Islam said last week. Julmira's death could have been prevented by a tablet that costs a few pennies. Thousands of children in East Timor die prematurely or suffer from malnutrition, anaemia and stunted growth as a result of intestinal parasites. The poorest nation in Asia cannot afford a national deworming programme in schools.

Lack of funds for health services is common in developing countries but tiny East Timor is a special case. Off its shores lie vast oil and gas reserves that could transform the economic fortunes of the world's youngest nation. Using revenue from the energy deposits, it could develop industries, repair crumbling infrastructure, invest in health and education, and alleviate poverty.

There is one hitch: East Timor's large and affluent neighbour, Australia, claims ownership of two-thirds of the lucrative resources. The riches lie beneath the Timor Sea, the 400-mile stretch of water that divides the two countries, and negotiations on a new maritime boundary have just started.

The outcome, said President Xanana Gusmao, literally spells "life or death" for his homeland. With access to the fuel royalties, East Timor - which recently celebrated its second anniversary of independence - could become self-sufficient. Without them, it will remain trapped in a cycle of poverty, massively reliant on foreign aid. And children like Julmira will keep on dying.

The origins of the maritime dispute lie in East Timor's long and brutal history of foreign occupation. The oil and gas fields are located close to its coast; in fact, the richest field, Greater Sunrise, is just 90 miles away. But a boundary agreed by Australia and Indonesia in 1972, as 400 years of Portuguese colonial rule were about to end in East Timor, placed most of the reserves inside Australian territory. Canberra showed its gratitude in 1976 when it became one of the few governments to recognise Indonesia's annexation of the half-island.

The sea border was enshrined in a treaty in 1989, and Australia kept silent during a quarter-century of oppression of the East Timorese by Jakarta's military forces. In 1999, it finally woke up to the atrocities being committed on its doorstep, leading an international force to end the violence that followed East Timor's vote for independence.

Nearly five years on, as the poverty-stricken nation struggles to build a future, Australia has decided that generosity has its limits. In talks that began in April, Canberra insisted on keeping the 1972 boundary. In vain, the Dili leadership invoked international law to support its claim for the border to be redrawn halfway between the two countries.

There is much at stake. Greater Sunrise alone, as yet undeveloped, contains $25bn (£13.6bn) worth of deposits. If the boundary was set along a median line, East Timor would receive $12bn in tax revenue over the next few decades. Under the status quo, however, its share would dwindle to just over $4bn.

As the diplomatic language sharpens, ordinary East Timorese - who welcomed the Australians as liberating heroes in 1999 - are angry and disappointed. Demonstrations including a hunger strike were staged outside the Australian embassy last month, and graffiti has been scrawled on walls around the potholed capital, accusing Canberra of stealing Dili's oil. Protesters say that, having escaped the yoke of Indonesian occupation, they now face "economic occupation" by Australia.

In his modest presidential office, behind a burnt-out former vehicle registry with a façade of smashed tiles, Mr Gusmao spoke of broken dreams. "Our people fought for so many years, not to have a flag or a president, but because they believed independence would bring them a better life," he said.

"We have had four and a half years of begging from foreign governments, but we still have to import rice, we still have schools without roofs and desks. The money could produce a miracle here. We are a small country and we could eradicate poverty, illiteracy, disease." Mr Gusmao echoed a recent warning by the aid agency Oxfam that, without the royalties, East Timor could become a "failed state". Eyes flashing, he said: "What we are claiming is not in the Gulf of Carpenteria [off Australia's Northern Territory]; it is very, very near us. We are not doves; we are a proud people with dignity. We only claim what is ours."

Hardship is widespread in a country where, despite all the foreign aid, 41 per cent of people live in extreme poverty. But it is the children who suffer most. Twelve per cent die before the age of five, mostly from preventable diseases. Malaria and tuberculosis are common killers. Hospitals are short of medicines and equipment. There are no vaccination programmes. East Timor has only 16 doctors.

Dr Islam, the sole pathologist, said: "All these diseases could be easily eradicated, but they are short of money. They are short of everything here." He was deeply affected by Julmira Babo's death. "In this century, people are dying of worms, my God," he said. "Can you believe it? How can anyone believe it? But this is the reality of life in East Timor."

That reality is evident in villages such as Hera, east of Dili. In Hera, people eke out a subsistence existence by catching fish or growing rice or maize. Two-thirds of homes have no electricity. Twelve standpipes serve the entire community. Residents have to walk miles to the nearest clinic. "Life is very, very difficult," said the village head, Antonino Da Silva.

Mr Da Silva said: "We are politically independent now but economically we are not free. The oil belongs to us; it's the riches of East Timor. Our country has a vision but, without the oil, East Timor will get poorer and Australia will get richer and the vision will remain a dream."

Half of East Timor's 800,000 people are illiterate but, in Hera, many villagers cannot afford to educate their children. Primary school costs 50 cents a month; high school $2. One teacher, Antoni Tetibuti, said: "In the beginning the children come, then gradually they stop coming, because their parents can no longer pay." Mr Tetibuti said his pupils had a poor diet devoid of protein. "They only eat corn and cassava. No meat or fish, no eggs or milk. Their physical and mental development is retarded. They don't have energy and they find it hard to concentrate."

This is the context in which Australia, the wealthiest nation in the region, is demanding the lion's share of resources in the Timor Sea. It has refused to submit to third-party arbitration; it was no coincidence, many critics believe, that it withdrew from the International Court of Justice and the International Tribunal on the Law of the Sea just before East Timor's independence.

Boundary rows are generally resolved by these bodies and, in recent decades, a median line has been the norm. Australia, however, believes the border should follow its continental shelf, which extends far out into the sea. Since 1999, it has reaped $1.5bn - equivalent to $1m a day - from exploitation of a field called Coralina/Laminaria, beneath East Timor's half of the seabed.

Australia claims it is being exceedingly generous because it gave East Timor 90 per cent of a so-called "joint petroleum development area" in 2002. But it fails to mention that Greater Sunrise - of which it currently controls 82 per cent - is worth triple that area. Dili is furious that Canberra is already issuing exploration licences close to Greater Sunrise, which remains disputed. The Australian Foreign Minister, Alexander Downer, has accused the Dili leadership of using emotional blackmail.

"They've made a very big mistake, thinking that the best way to handle this negotiation is trying to shame Australia, is mounting abuse on our country, accusing us of being bullying and rich and so on, when you consider all we've done for East Timor," he said recently.

"The tactics that are being used by East Timor, a country which we helped to bring to independence and to which we have been enormously generous and supportive over recent years ... are to try to create public controversy in Australia by a lot of emotive criticism."

Questioned about the moral dimensions of the issue, Mr Downer said: "It's a curious principle that if one country is richer than another and the two countries are adjacent, the richer country should cede territory to the poorer country ... on that principle, I suppose the United States should cede Texas to Mexico." No one denies Australia has been supportive of East Timor. It is giving Aus$40m (£15m) in aid this year, and its soldiers have formed the backbone of the UN force that has guaranteed the nation's security. But the money it has spent on financial and military assistance is dwarfed by the revenue it has already received from the Timor Sea.

Many Australians deplore their government's stance. Bob Brown, an opposition Green Party senator said: "Australia is behaving like a wealthy neighbour that has jumped the fence and pinched vegetables from the garden of the poor family next door. The pirating of East Timor's resources makes it embarrassing to be Australian."

Others, including East Timor's Prime Minister Mari Alkatiri, point out that it is in Australia's regional interests for its neighbour to be stable and prosperous. Mr Alkatiri said: "We fought for 24 years against the dictatorship regime of [the former Indonesian president] Suharto. We always dreamed of becoming a democratic country and Australia was an example for us in the region. Australia preaches the rule of law around the world, but now it is resisting the application of international law."

He wants the international community to exert pressure on Canberra to reach a fair solution. In the meantime, Australia - which has declined to set a timetable for the boundary talks - can afford to drag its feet. When you're earning $1m a day, the status quo looks fine.

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